New vehicle purchase and pricing

[Jwskj]

Here's a personal commentary on vehicle pricing and purchasing.



I have done A LOT of research into vehicle pricing and purchase costs from various dealers to try to maximize my return on the dollars I spend on a new truck, and having just made my purchase yesterday, I feel confident that I really couldn't have done much better.



Everybody is familiar with MSRP (Manufacturer's Suggested Retail Price), or what is commonly called the sticker price. With very little effort on the internet, for those who are serious about getting the best deal that they can, the dealer's cost prices are also available with very little looking.



If you are buying a new vehicle, you should be able to get the sales rep to go to the dealer's cost pricing. Then, of course, any manufacturer's rebates would further reduce the cost.



The difficult part is getting a deal that goes beyond that, into what is sacred ground... the dealer's holdback.



There are several dealers that will offer further incentives from that area, but I discovered an excellent way to get the best deal. If you are a member of Costco or Sam's Club, take advantage of that organization's new car purchase program. You call them up, give them your zip code, and tell them what brand of vehicle you want, and they give you a dealer name and a salesman to contact. You call him, schedule a meeting, show him your ID card from the buying club and he gives you the 'buyer's club' price. In the case of my Ram truck, it amounted to dealer's cost pricing for the vehicle and every option that I specified, plus all current applicable rebates, plus an additional $600 discount. No hassle, no long back-and-forth, no nothing... . just the bottom line.



Different dealers will have their own costs for doc fees and paperwork, but there's no hassle with the vehicle pricing, whether it is a stock vehicle or a special order.



I hadn't even considered the buyer's club thing until last week when I was at Costco and there was a new vehicle out front with a rack full of buyer's club brochures sitting next to it. I called Costco, got the dealer's information, and called to make an appointment one day, talked with the rep the next day, and closed the deal the following day... 8-10 weeks projected delivery.



Piece of cake

 

[Regcabguy]

Dave Smith

I went through Dave Smith in 10-06 and special ordered a truck They were extremely generous and priced my truck@ $1300 under invoice minus rebates. That included an extra $240 discount because my Farm Bureau membership wasn't complete(you needed 30 days) which would have discounted it an additional $500. The truck msrp'd @ $39,873 and my cost was $30,400. I think those days are long gone. Ed @ Dave Smith Motors is supposed to be good. My salesguy quit a little while ago.



Everyone was very cordial with the exception of the finance dept. when I declined the extended service plan.



I'd use them again.

 

[Vaughn MacKenzie]

I would say for those who aren't with Costco or Sams or any buying club would probably most consistently get the best prices from Dave Smith, but also in the past there were a couple other dealers giving special and very good discounts to TDR members. Adam Macomber with Dishman Dodge in Spokane WA sold a lot of trucks to members on here, I think it was a straight $1000 of invoice but +incentives but I don't recall for sure. Also TDR member Tomeygun, salesman with Lou Fusz Dodge in Missouri, worked a lot of great deals for members. Both of these guys have moved on though and I don't think either dealership has anything special for TDR members currently. The program with Dishman was set up by NW Bomber member Big Bob.

 

[BrianJ]

We have started with the Costco buying service with the last few vehicles we have bought, but we always end up beating that price by at least $500, and up to a couple thousand, by comparison shopping with other dealers. I do all my research, including vehicle choice and options and pricing information from sources like Edmunds.com, and usually walk in to the dealer with my own spreadsheet showing what I will do and ask them to take it or leave it. If you don't want to do the other research the Costco program would net a decent price, but not neccessarily the best price available.

 

[Jwskj]

Somehow, I find it very hard to believe that you can beat dealer's cost minus rebates, minus a $600 Costco/Sam's Club rebate by even hundreds of dollars, let alone thousands.



Once you get to the dealer's cost and take off the rebates, you are at the point where you are into the dealer's hold-back, which only amounts to at most, 3% of the vehicle cost. At the very upper-end of a RAM truck purchase with a boatload of options, the hold-back is in the $1800 range.



Dealers are very reluctant to cut too deeply into their hold-back money. For discounted deals, that's their primary profit area.



My suspicion is that if you were able to beat the Costco discount by 'a couple thousand', then the dealer you were talking to started out at the sticker price.



There is absolutely no way that I can think of that a dealer would give away all of the hold-back and more just to sell a new truck.

 

[Regcabguy]

Somehow, I find it very hard to believe that you can beat dealer's cost minus rebates, minus a $600 Costco/Sam's Club rebate by even hundreds of dollars, let alone thousands.



Once you get to the dealer's cost and take off the rebates, you are at the point where you are into the dealer's hold-back, which only amounts to at most, 3% of the vehicle cost. At the very upper-end of a RAM truck purchase with a boatload of options, the hold-back is in the $1800 range.



Dealers are very reluctant to cut too deeply into their hold-back money. For discounted deals, that's their primary profit area.



My suspicion is that if you were able to beat the Costco discount by 'a couple thousand', then the dealer you were talking to started out at the sticker price.



There is absolutely no way that I can think of that a dealer would give away all of the hold-back and more just to sell a new truck.

In my case DSM actually did. Holdback was $1100 and they deducted $240 more for the Farm Bureau deal. It may of been the salesguy trying to get the salesman of the month or the dealership needing to sell one more unit I don't know. DSM at the time was selling a vehicle every 17 minutes or so. They had a crew of over 50 internet sales people alone.

 

[Jwskj]

We're not communicating here... .



The Farm Bureau discount is considered a rebate/discount that is available from any dealer, not just DSM, and it is on-top of manufacturer's rebates. Regarding Farm Bureau and factory rebates/discounts, those discounts are determined by where the vehicle is being licensed, not where you happen to be buying it from. If you live in the Central geographical area and you buy the vehicle in the Northwest, where there might be a special discount promotion being run, you don't necessarily get that if it is not also made available in your home area. DSM has stated that to me.



Also, the $1000 discount from hold-back that you mentioned is because you bought a vehicle from DSM from inventory, not a factory order. If you ordered a vehicle from DSM, you only get a $300 dip into their hold-back. DSM's $1000 discount into their hold-back is a fantastic deal if they have what you want in stock as an inventory vehicle, and I don't know if you can beat that anywhere, because that discount is from dealer's cost, and it is exclusive of manufacturer's rebates and Farm Bureau discounts and military discounts.

 

[d6c]

Until I get to see the dealer write out the check to the manufacturer for the rig I am about to buy..... THAT'S NOT GOING TO HAPPEN... . I will never actually KNOW what the dealer's cost is... . trust me on this one, they make more money on rigs than they are ever going to admit too... . and yeh I've looked at a lot of different manufacturer's invoices... good luck understanding everything that's on one of them...

 

[sag2]

Chrysler invoices are not at all hard to read. The invoice price is the price the dealer actually pays Chrysler for the vehicle. It is the same for every dealer, period. The holdback is paid to the dealer several times a year based on the total of all the vehicles they purchased. The holdback is on the invoice as HBxxxx where the x's are the holdback amount, 3% of "net" invoice. There are also different advertising fees, and they are different depending on the region the dealer is in. They are not included in the "net" invoice amount.

In addition there are national and regional wholesale incentives that are paid to the dealer for hitting sales objectives. You will never know the amount on those, as they are different for every dealer depending on a variety of factors. So it is possible to get a deal at invoice less holdback, the reality is that is probably as good as you will ever get. The dealer is in business to make a profit, and the only way he can is if he makes a profit on the average of all vehicles sold. Based on what Chrysler just released publicly only about 80% of the dealers are currently profitable.

So the bottom line is contrary to some myths, there is only one invoice, and every dealer pays the same for every vehicle period. The difference is the amount (if any) the dealer can earn in wholesale incentives. And any good dealer isn't going to tell you how much if anything they are earning on the back side. Everything else is pretty much common knowledge if you search for it.

 

[d6c]

Please don't take this as being "ornery"..... Chrysler, or any other big name, any business, is only going to release info. that works for themselves... somehow... someway. The sales dept. is really two divisions, at least, new or used. The service dept. is a completely separate division, unto itself. The details are never going to be available to any of us... . and should they be??? The problem I have is "the dealership(s) are not profitable" type of statements... . Bottom line is make the best deal you can and go with it! Keep in mind though, there is always going to be somebody that got, or say they did, a "better deal"

 

[BrianJ]

Somehow, I find it very hard to believe that you can beat dealer's cost minus rebates, minus a $600 Costco/Sam's Club rebate by even hundreds of dollars, let alone thousands.



Once you get to the dealer's cost and take off the rebates, you are at the point where you are into the dealer's hold-back, which only amounts to at most, 3% of the vehicle cost. At the very upper-end of a RAM truck purchase with a boatload of options, the hold-back is in the $1800 range.



Dealers are very reluctant to cut too deeply into their hold-back money. For discounted deals, that's their primary profit area.



My suspicion is that if you were able to beat the Costco discount by 'a couple thousand', then the dealer you were talking to started out at the sticker price.



There is absolutely no way that I can think of that a dealer would give away all of the hold-back and more just to sell a new truck.

I know exactly how the Costco program works, and in each case I went to the corresponding dealer in the costco program to get their pricing. I also did the research (mostly on Edmunds) to figure out dealer invoice and what people on average are paying for said vehicle to calculate what I thought I could get the vehicle for. In every case I was able to beat the "costco" dealer by going to another dealer with the information I learned from my own research. My truck was the case that was appx. $2k better than the costco program, a Ford escape for my wife was about $700-800 better, and I did about $500 better on a Nissan Pathfinder. Beyond that, it's of no consequence to me if you believe it or not.

 

[Regcabguy]

The year before ordering my truck through DSM,Dishman offered me a $1300 under invoice deal on a special ordered truck. This was for TDR members and with Big Bob's name mentioned. As stated,the incentives can fluctuate while the truck's being built. I was told that whatever incentive was in effect the day of sale,not order date, would be honored.



My local buddy bought a 2007 5. 9 CTD, regcab ST,cruise,lsd,4wd, truck mirrors,G-56,4wd for just under $29,000. Same salesguy,just a couple of months later. The incentives had increased during that period. That was stock inventory in that instance.

 

[Ben S]

Fighting Chance New Car Buying Guide - Avoid haggling for a new car. Buy or lease a new car the smart way with our car buying guide. Get new car invoice prices for all vehicles. Buying or leasing a car? Don't do it without this car buying and leasing



No I'm not spamming just a happy customer.



Funny things about dealer profit..... Paperwork processing fees vary from dealer to dealer depending on the state ($$profit$$), you almost never get holdback no matter what they tell you, local advertising fees passed on to you ($$you know those dealer ads you see on your local cable channels $$) and manufacturers have started offering back door cash to dealers based on sales volume that consumers never hear about or see printed even in the industry newspapers... ie Car Deals, where current deals are listed for each manufacturer vehicle for sale.



The big dealers consistently offering the best prices probably get a manufacturer incentive based on sales volumes. that you never even know about. You don't really know what they make on those trucks when they get a lump sum back from Chrysler at the end of a strong sales month, but they aren't giving deep rebates for free or out of the goodness of their hearts because they love Dodge and want you to have one for cheap.



Just enjoy your truck and don't worry about what you paid. IMO, Most of those clubs don't get you all that great a deal, it is the hassle free buying that most people like. Dealers make their real money on service and used car sales but manufacturers are finding more creative ways to make new car sales more profitable since pricing is all over the internet now... ie people figured out the game and now they are changing the game.

 

[MannyC]

ed @ dave smith

j--- i forgot your handle. i purchased my rig through ed west @ dave smith. it was a factory new order. i got a better deal than was available anywhere else, i checked dealers from coast to cost asking them to price a specific build. i got the factory cash and whatever else was available from dodge. also got a 500 equipment credit, a snoplow upfitters rebate (likely available at any dealer). the ONLY thing that could be considered an upcharge or profit maker was the tinted front windows & detailing that were a MUST. i wanted the tint anyway, so i was good to go. if you can get a cost savings out of costco, i salute you and only hope the diff in price is worth losing the support you get from DS, even remote control. One call to my salesman has remedied the few factory defects discovered after purchase.



get your best price, call ed west. if he doesn't beat it by a mile, i would be surprised... .

 

[dodgesst]

when i was ordering my 11, i called around (dave smith, big o) got the best price i could, took it to my local dealer and said i want to buy from the home town dealer, meet or beat this price and we will deal. i placed my order that day and haven't looked back

 

[RAton]

I also called all around for their "best price" on the build I wanted. I then took the best quote I recieved to my local dealer told them I anted to shop locally and asked them to match. They said no way they wouldn't make any money. I walked out and a hour later they called and matched the price. I felt good about what I paid and isn't that what it is really about? The only real value in anything is what we place in it.

 

[craiggo]

I posted the same commentary a few months ago about Costco. Costco is a great place to start (or finish depending on your haggling skills).

Long story short, the dealers will occasionally "give the car away" depending on their sales numbers and stats. Sometimes it's more "valuable" for a dealership to lose money on your sale to get the overall numbers they need for the week/month/year.

It does pay to shop around.

 

[rrl989]

I'm a Costco member, is it acceptable to visit my local dealer/salesman for a price, then go thru Costco for the same local purchase ? Do the sales people get upset once they designate you as their customer first?

 

[craiggo]

I'm a Costco member, is it acceptable to visit my local dealer/salesman for a price, then go thru Costco for the same local purchase ? Do the sales people get upset once they designate you as their customer first?

In my case, that is exactly what happened. I was negotiating with this guy and after I called Costco, he called me back and said I he just got notified by Costco so here is your "new and improved" pricing.

 

[rrl989]

In my case, that is exactly what happened. I was negotiating with this guy and after I called Costco, he called me back and said I he just got notified by Costco so here is your "new and improved" pricing.

So it would be better just to go thru Costco first ? How much better was the Costco price over your own negotiating ?



Thanks